“I am directing my administration to begin the process of eliminating policy exemptions that give Hong Kong different and special treatment,” Trump said in a statement.
“My announcement today will affect the full range of agreements that we have with Hong Kong, from our extradition treaty, to our export controls and technologies. We will take action to revoke Hong Kong’s preferential treatment as a separate customs and travel territory from the rest of China.”
According to one source of mine, some companies use Hong Kong as a legal way to finish assembly to bypass tariffs on Chinese made goods from the mainland. If so, the president’s action will render that moot.
My question is, what will this mean for the scores of electronics companies that have sourcing operations in Hong Kong? While most of their business is done across borders, Hong Kong offers a more Western feel (and rules) for ex-pats. With the Beijing taking an ever greater interest in the city-state, that is almost certain to change.
I could see companies moving their program management staff elsewhere, if for no other reason than Hong Kong is expensive — maybe the most expensive place in the world for ex-pats. But if so, where would they go? And what will happen to Hong Kong if other industries follow suit?
There was still a gap, however. No book existed that discussed troubleshooting everyday assembly defects and challenges. My good friends Phil Zarrow and Jim Hall have addressed this information in their Circuit Insight radio show Board Talk. All that was needed was a little encouragement to assemble it in book form. This task has now been accomplished!
That’s just a crazy extrapolation. The US was at 3.1% unemployment prior to Covid-19.
Repeat after me: There. Were. More. Jobs. Than. Qualified. Workers.
For two decades, the no. 1 complaint I’ve heard from US business owners is the lack of manufacturing talent. Even in times of higher unemployment rates (the last two months notwithstanding), managers consistently noted the lack of basic communication and math skills among the workers available.
In his op-ed, USTR Robert Lighthizer adds, “If you want certainty, bring your plants back to America.”
It’s not that simple. You need the whole supply chain. And you need an end-market. The US, at 327 million people, isn’t big enough to sustain a company of any real size; those firms must be able to sell into other (larger) markets too.
And all those other big markets (China, Brazil, EU, etc.) have their own “make local” requirements and incentives.
I wish Lighthizer were right. But I’ll say it again: The US does not have enough worker talent to handle manufacturing at the cost necessary to satisfy the US market.
The pandemic’s economic impact started as a supply chain shutdown in Wuhan, China, but rapidly became a three-tier global disruption. As the virus spread, worldwide supply chain was interrupted, followed by an unprecedented shift in product demand and most recently by mandated factory shutdowns imposed on non-essential product manufacturing lines.
Let’s discuss the impact of these disruptions and explore how we can mitigate these forces that threaten to destabilize manufacturing.
Disruption #1 – Manufacturing and the supply chain
The first disruption to manufacturing and the associated supply chain was in China. This was due to the outbreak of novel coronavirus (Covid-19) forced workers in that county to stay home rather than return to work after the Chinese New Year holidays. The resulting impact was that a significant amount of the world’s manufacturing capacity was essentially shut down for an extended period, more than two weeks in most of China, and much longer in Wuhan.
This manufacturing and supply chain shutdown turned out to be just the start. As the virus spread, manufacturing shutdowns rapidly spread throughout Europe and the US. We are now faced with the challenge to scale additional capacity or rapidly move production from one facility to another, neither of which are feasible in the manufacturing industry.
Disruption #2 –Demand volatility
Just as China’s factories started to come back online it became abundantly clear that the challenges were global and that certain products like PPE (Personal Protective Equipment) and medical devices were in unprecedented demand in terms of volumes and urgency. Meanwhile, workers, who are themselves consumers, were staying home and not shopping, sending economic shockwaves around the world, resulting in a dramatic downturn in market demand for non-essential or discretionary products. Add government and administrative intervention, including the loosening of FDA regulations and the use of the Defense Production Act in the USA, and it’s easy to see how the manufacturing industry was suddenly forced to deal with the unprecedented reactionary shift in market demand.
Disruption #3 – Workplace challenges
The third disruption came in the form of government directives to shelter in place and enforcement of workplace social distancing (including new OSHA guidelines). Furthermore, non-essential factories have been shut down for an extended period. Once factories reopen, manufacturing plants will need to adhere to new and complex regulations. For example, when factories re-opened in China, they were mandated toto demonstrate ten-day supply of face masks for each worker. For example, a factory of 500 operators would need 10,000 masks to be authorized to continue operations. For many factories, an ongoing supply of PPEs in short supply and can be challenging and costly to obtain.
Once manufacturing companies receive authorization to restart operation, workplace social distancing on the factory floor will impact every discrete manufacturing function Traditionally, manual assembly lines are designed with minimum operator to operator spacing to facilitate the passing of product between stations and to minimize required floor space. With the new OSHA directives, these manual lines will need to be redesigned to increase operator spacing. factories have met these challenges in creative style, like running extra shifts to redeploy staff and keep them distanced.
The data-haves and data-have-nots
Manufacturers that have embraced digital transformation, and the associated software-controlled automation, are best equipped to succeed in light of these disruptions. Real-time data drives visibility, which allows these “digital haves” to see the impacts of disruption sooner. Meanwhile, smart automation provides tools to adapt and adjust course quickly. Not only are these companies able to adapt production to meet increased demand or comply with new regulations, they are able to rise to the challenge of manufacturing the machines, devices, and consumables needed to help fight the virus, perhaps offsetting the loss of orders for ‘non-essential’ products.
The Future is agile and resilient
This perfect storm of disruption has exposed limitations of traditional manufacturing ecosystems and their associated supply chains. It has become clear that manufacturers need to move away from traditional analogue operational models, where production takes significant and costly time to set up on a line and requires constant tweaking or adjustment by experts with tribal knowledge of manufacturing processes.
To minimize the impact of economic disruption, manufacturers need to operate in a new paradigm. This new version of manufacturing is fully data-enabled and software-driven to deliver an automated solution that provides the resilience to cope with disruption and the agility to react and adapt when that inevitable disruption occurs.
Considering previous viral outbreaks and natural disasters, Covid-19 isn’t the first global event to disrupt manufacturing and the supply chain, and it certainly won’t be the last. One key learning from this unprecedented event is that companies that have embraced digital transformation of manufacturing are the most robustly equipped to survive this economic disruption. These forward-thinking manufacturers will surely reap the prosperous benefits of their proactive digital transformation.
A colleague asks whether companies are looking at India as a country they can source electronics goods.
Good question. I would say that right now it’s not high on the list. It has a long way to go to develop the infrastructure and mass of supply chain companies dedicated to electronics (component manufacturers, laminate suppliers, chemistry suppliers, etc.).
But … the bloom is way, way off the rose in China. China is less attractive from a labor rate perspective, and coupled with the tariffs, firms were already looking at alternatives even prior to Covid. See below for the year-over-year changes in electronics imports to the US from certain nations:
India’s electronics imports to the US grew 20%+ year-over-year in back-to-back years. Granted, it was starting from a low base: imports in 2016 (the base year) were just $754 million, and so even with the increase the total is just over $1.1 billion. Vietnam, another big gainer, is at now at $22.7 billion. China, even with the dip in 2019, was at $170 billion.
I do think US companies will to a greater degree be looking at nations outside China as potential manufacturing centers. India’s massive population continues to make it attractive of course. Now it needs to attract a few more assembly companies, which in turn will drive the suppliers to locate there.
My short answer is, I think there will be an impact, but it will swing toward more contact, not less. Indeed, after being cooped up for so long, I think people will crave human connections. Moreover, I don’t think it will have an effect on trade shows. In fact, I think this will reveal lots of holes/flaws in inter-/intra-company digital communications, which gives us all something to work on for the next quarantine (heaven forbid).
We aren’t the only ones contemplating what happens next. The Boston Globe this week published a piece in which several self-styled business futurists and science-fiction writers expect the world will look like next fall/winter.
I can’t say I’m impressed with most of their responses, which if anything feel exaggerated for effect. But see for yourself.
You’ve probably heard of turnkey PCB assembly, an all-in-one solution design and specifications are sent to the PCB manufacturer and they return the assembled PCBs to you (or your client) ready to use. It sounds convenient compared to doing all the legwork yourself, or having one of your engineers do it, but did you know that turnkey assembly also offers the shortest possible lead times for PCBs?
Let’s take a look at some of the ways that turnkey PCB assembly can shave time off of the design process and reduce turnaround time.
It Saves Engineers Time
Turnkey assembly saves engineers time in a couple of important ways. First, time spent hunting for components and availability is eliminated. Manufacturers that offer turnkey assembly have teams dedicated to component sourcing. This also extends to component substitution and BoM management. If something isn’t available, your turnkey team will be able to deal with substitutions for you and check that all substitutions are compatible with the overall design.
Second, and maybe an even bigger time savings, is the reduced communication load. When an engineer is organizing multiple component suppliers, a PCB fabricator, an assembler, and shipping among all of them, keeping everything sailing smoothly can eat a lot of time. Keep your PCB designers focused on their main job—designing and revising PCBs.
will mean that prototypes are designed, tested, and redesigned faster. No time
spent following developments with assembly; no logistics work organizing the
movement of boards or components between vendors.
With turnkey assembly, engineers have a single point of contact to deal with any and all questions related to the development of the product. They will keep you up-to-date on the process, and any changes that need to be made can be addressed quickly.
It Reduces Transportation Time
When dealing with multiple companies for every aspect of the production process, the time that goods spend moving from one stage to the next can really add up. Compare that with a turnkey assembly solution:
The PCB manufacturer already has ties with component suppliers and knows which parts to find from each one.
They have a store of common components already on hand and can handle component inventory storage for you.
The assembler is either in-house or nearby.
Instead of orchestrating businesses across borders and possibly continents, the entire process is localized, moving quickly from one stage to the next. That leaves shipping the final product as the only major shipping time.
There Are Fewer Quality Concerns
With a turnkey assembly solution, there are fewer quality concerns to deal with, especially when shipping between vendors.
In a multi-vendor scenario, if you instruct your PCB fabricator to ship your bare boards to an assembly house and they arrive with an error or a large percentage of damaged boards, your only option is to make a new order and wait. With turnkey assembly, this situation is impossible.
company you deal with is responsible for your project from PCB creation to
final testing, if they make a mistake with one step, they catch it and fix it
in the next. As we mentioned before, you have a single contact or team within
the manufacturer overseeing the progress of your order and checking for quality
at each stage.
to mention, you’re dealing with a single organization. Internal teams are
familiar with each other and have experience working together.
Miscommunications and mix-ups are reduced and it’s in the manufacturer’s best
interest to make sure that each stage supports the next and products move
through the process as efficiently as possible.
course, it’s possible to run into a bad manufacturer, which could cause you
even bigger problems than one bad vendor might. So, it’s important to vet your
potential manufacturer carefully, and find reviews or references if possible.
Scale Up Quickly
benefits go beyond the turnaround time for your initial prototype. Once you’re
satisfied with your PCBs, the manufacturer can immediately start to produce
them in quantity.
Think about it. Instead of juggling multiple suppliers and manufacturers to finish the prototypes and then searching for a manufacturer for production, you could finish prototyping quickly and move forward immediately with a company with which you have already developed a relationship.
Not all PCB manufacturers that offer turnkey assembly offer large-scale production, but if your needs fit with the manufacturer’s capacity, turnkey assembly could offer a truly seamless production process. Some manufacturers can even ship to clients for you or offer drop-shipping services.
With turnkey PCB assembly, you get a single, devoted team backing you up as you take a design from PCBs to working products. With less time spent on logistics and organization, you can expect much faster results. It could turn the design process around by reducing product turnaround.
Like all the companies we serve in the electronics design and manufacturing industry, we are closely watching the world’s response to Covid-19.
All UP MEDIA GROUP staff work remotely,
and our operations should continue as normal. As of this notice, our websites,
magazine issues, podcast and newsletter will be updated and published per the
schedule in our 2020 Media Kit.
We currently intend to hold the PCB2Day
workshops scheduled for June in Austin, TX. We will provide regular updates to
all sponsors, speakers and registrants as the situation on the ground becomes
PCB West 2020 at the Santa Clara (CA)
Convention Center remains on track to take place in September. Confirmation
letters to speakers are being sent this week, and our conference program and
registration will be available by early May.
The health of our employees, contributors
and customers is paramount. We will take any measures to ensure we do not
subject any staff, contributors or customers to unnecessary risks due to the